Pension question for Contractors

[vince_labcoat]

Hello,

I started a Stakeholder Pension with Aviva not long after I started my Ltd company up when I moved to contracting. As I pay myself £6k per year salary with the rest coming from dividends, I was told that I can only pay 100% of my salary into this Stakeholder Pension, so this is what I do.

I have since transferred old Company Pensions from my permie days over to a new Hargreaves Lansdown SIPP which I love as I get to monitor it whenever I like, although they are just sitting there currently. Am I allowed to top this up with my own cash (and get the 20% relief), as I was told that I wasn't allowed to as 100% of salary already goes to Stakeholder ? If so then I would like to. Secondly, if the answer to the last question is yes, if I wanted to transfer the Stakeholder into the HL SIPP, could I still pay 100% LTD salary to SIPP + make extra personal contributions to it also ?

Quite keen to get my pension moving up, so any help would be greatly appreciated.

thanks

[Hex]

No - you can't top it up with "your own" cash. Only cash from employment which has been taxed can be used.

But, yes - you can top it up with a direct company contribution from your limited company directly into the SIPP. This contribution will be paid by your Limited company and will come out of the company coffers before deduction of corporation tax.

It is actually better to do a company contribution as you save 21% corporation tax. A personal contribution only saves the 20% income tax.

Ask Hargreaves Lansdown what the procedure is for paying one off Company Contributions to your SIPP. I do mine with www.sippdeal.co.uk. I just have to fill in a form and send a letter on company headed paper, together with the payment (which I do as a direct BACS transfer).